Inflation

Inflation: Everything Everywhere But Less So

Mar 14, 2023 1 min read paid

And the Academy Award for the Biggest Economic Surprise of 2022 goes to . . . inflation. It has defied Fed expectations by being both transitory and persistent: Consumer goods inflation has been transitory, while consumer services inflation has been persistent. In any event, overall measures of consumer inflation continue to moderate. Consider the following: (1) The New York Fed’s consumer expectations survey was released on Monday with February’s results. It

Ed Yardeni

The Economic Week Ahead: March 13-17

Mar 12, 2023 2 min read paid

This week will be jam-packed with economic indicators. More important will be how government regulators deal with the SVB debacle so that it doesn't turn into an economy-wide disintermediation disaster in the event that uninsured deposits are withdrawn and parked in Treasuries instead. Our bet is that the Fed and the FDIC will act quickly to keep this from happening. For the sake of financial stability, the Fed

Ed Yardeni

Thus Spake The Fed Chair

Mar 7, 2023 2 min read paid

Fed Chair Jerome Powell is the high priest of monetary policy. His pontifications are carefully read and analyzed by his followers. We are among his followers because we are Fed watchers. Indeed, we often count how many times certain words appear in his public remarks. The word “disinflation” was uttered 11 times at Powell’s press conference on February 1. He was the only one who mentioned the word at

Ed Yardeni

Q4 Productivity & Labor Costs Going Right Way

Mar 2, 2023 2 min read paid

Bond and stock prices opened weak this morning on good news from the labor market. Good news is bad news because the Fed is trying to slow the economy to bring down inflation. So good news increases the risk of higher-for-longer interest rates. The 10-year Treasury bond yield is back above 4.00%. At 4.95%, the 2-year Treasury yield reached levels not seen in more than a decade. The

Ed Yardeni

The Rent Is Too Damn High!

Feb 27, 2023 1 min read paid

As a result of the pandemic, the demand for single-family homes soared, and so did their prices. Rising mortgage rates last year clobbered affordability for first-time homebuyers, forcing them to rent. So tenant rent inflation soared from about 2.0% y/y in early 2021 to 8.6% in the CPI during January of this year (chart). Rising mortgage rates also reduced the supply of homes. Since many homes have

Ed Yardeni

Two Too-Hot No-Landing Indicators Hit Markets

Feb 24, 2023 2 min read

The stock and bond markets reacted badly to today's stronger-than-expected personal income data and hotter-than-expected PCED. Is the economy experiencing an inflationary no-landing scenario? If so, Fed officials might conclude that the only way to bring inflation down is to push interest rates up until they cause a hard landing. More likely in our opinion is that these two indicators along with January's other economic stats

Ed Yardeni

Rent Inflation Is Moderating

Feb 21, 2023 2 min read paid

The CPI's rent of primary residence is showing no signs of peaking, rising to 8.6% y/y during January (chart). However, it is widely recognized that this measure is a laggard because it includes rents not only on new leases, but also outstanding ones. The market-based rent inflation indexes compiled by Zillow and ApartmentList have been plunging from around 17% a year ago to 6.9% and

Ed Yardeni

The Economic Week Ahead, Feb. 21-24

Feb 20, 2023 2 min read

The holiday-shortened week is a light one for economic indicators. The BIG number will be January's PCED inflation rate, which will be released along with personal income on Friday. The month's CPI was higher than expected , though the y/y inflation rate continued to disinflate. The PCED inflation rate tends to be lower than the CPI inflation rate (chart). That's because rent of shelter

Ed Yardeni

Loose Fed Lips Sink Stocks & Bonds

Feb 16, 2023 2 min read paid

Stock and bond prices fell today as two none-voting FOMC participants (Bullard & Mester) suggested that higher-for-longer interest rates will be necessary to bring down inflation. They were reacting to the latest batch of economic indicators confirming that the labor market is tight, consumers are still spending, and inflation may not be falling fast enough. January's PPI, released this morning, rose 0.7% m/m. That was above

Ed Yardeni

Inflation Still Too High But Gliding Down

Feb 14, 2023 2 min read paid

January’s CPI release today showed that inflation is continuing to moderate, though perhaps more slowly than it did during the second half of 2022. The headline and core CPI rose 6.4% y/y and 5.6% through January down from 6.5% and 5.7% during December (chart). The CPI for all consumer goods rose 4.5% y/y in January, down from 4.8% in December and

Ed Yardeni

The Economic Week Ahead, Feb. 13-17

Feb 12, 2023 2 min read paid

Financial markets are likely to be action packed this week because the economic calendar is jampacked with key economic indicators that will impact the debate about both the economic and inflation outlooks, and their impact on Fed policy. The inflation action starts on Monday with January's FRBNY consumer inflationary expectations survey likely to show some more moderation in the one-year ahead series (chart). January's CPI (Tue)

Ed Yardeni

January's CPI Is Coming. Run For The Hills?

Feb 11, 2023 2 min read paid

The big event this week will be January's CPI release on Tuesday. Bond yields rose and stock prices fell last week as investors started anticipating a bad print. The Cleveland Fed provides a daily model-based Inflation Nowcast. On February 10, it showed the headline and core indexes increasing 0.65% and 0.46% last month. These are high compared to the MarketWatch consensus of 0.4% and 0.

Ed Yardeni

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